The Nasdaq stock market said Wednesday it will put up $40 million to compensate clients affected by the botched Facebook initial public offering.
But the amount has irked one major industry figure.
“It’s underwhelming at best,” Thomas Joyce, chief executive officer of Knight Capital Group, said. “Nasdaq has got to go back to the drawing board and come up with something else.”
A first-day trading glitch at the Nasdaq marred Facebook’s IPO, leading to complaints of slow order confirmations and too many shares offered at too high a price.
Subsequent lawsuits have alleged that the Nasdaq botched the offering and that deal underwriters Morgan Stanley and others failed to share lowered earnings forecasts with retail investors before the IPO.
The compensation, which is subject to approval by regulators, will see the Nasdaq pay $13.7 million in cash to its affected member firms.
Joyce’s firm Knight Capital Group, which was a market maker in Facebook’s IPO, said it alone lost up to $35 million due to Nasdaq’s glitches.
Losses by banks and brokerages due to the botched market debut may be as high as $200 million, Joyce said.
Robert Greifeld, CEO of the Nasdaq, said in a CNBC interview Wednesday that his company had been “embarrassed” by the technical problems that occurred during the Facebook IPO, and he apologized to the industry for what happened.
Reuters contributed to this report.
